A limited constitutional government calls for a rules-based, freemarket monetary system, not the topsy-turvy fiat dollar that now exists under central banking. This issue of the Cato Journal examines the case for alternatives to central banking and the reforms needed to move toward free-market money.

The more widespread use of body cameras will make it easier for the American public to better understand how police officers do their jobs and under what circumstances they feel that it is necessary to resort to deadly force.

Americans are finally enjoying an improving economy after years of recession and slow growth. The unemployment rate is dropping, the economy is expanding, and public confidence is rising. Surely our economic crisis is behind us. Or is it? In Going for Broke: Deficits, Debt, and the Entitlement Crisis, Cato scholar Michael D. Tanner examines the growing national debt and its dire implications for our future and explains why a looming financial meltdown may be far worse than anyone expects.

The Cato Institute has released its 2014 Annual Report, which documents a dynamic year of growth and productivity. “Libertarianism is not just a framework for utopia,” Cato’s David Boaz writes in his book, The Libertarian Mind. “It is the indispensable framework for the future.” And as the new report demonstrates, the Cato Institute, thanks largely to the generosity of our Sponsors, is leading the charge to apply this framework across the policy spectrum.

Search form

Search this site

Policy Analysis No. 410

Broadband Deployment and the Digital Divide: A Primer

By
Wayne A. Leighton

August 7, 2001

Executive Summary

In the New Deal of the 1930s the Rural Electrification Administration used federal subsidies to extend electricity to rural and isolated communities across the country. By subsidizing the significant capital investment needed to run wires and build infrastructure, REA support brought electricity to households that might otherwise have waited many years for such service.

Today, similar arguments are being made for subsidizing new technologies, such as broad-band Internet service. Some people are promoting the equivalent of an “REA for broadband” to ensure that rural and low-income communities gain access to high-speed communications connections. However, the REA analogy is not only misplaced, it is harmful. The wires over which broadband service can be transmitted are already in place—owned by telephone, cable, and even electricity providers. Upgrades are needed to provide broadband, but not the massive investment that is required to run a new line to every customer’s home. And wireless transmission from both satellite and land-based systems has just begun. Whereas electricity has traditionally been provided by a single distributor, broadband Internet service has many potential distributors that use a variety of technologies.

Tax credits or subsidies to promote broadband deployment would distort competition between those technologies, enriching incumbents and thwarting the technologies of tomorrow. For an industry in which the technologies of today were unheard of just a few years ago, nothing could threaten progress more. And for those consumers who are waiting for prices to fall or service to extend to their communities, new technologies and competition will offer the best solution.

Lost in this debate, moreover, is the fact that access to the information superhighway does not require broadband. While broadband is superior, it is not necessary for access.

The first question, then, is whether low-income, rural, and other households are gaining access to the Internet at all. The second question is whether those households—and for that matter, all Americans—are gaining broadband Internet access. To both questions, the answers are decidedly positive. In light of this, broadband tax credits or subsidies appear to be an unwise, unnecessary, and expensive approach to what is quickly becoming a nonproblem.

Read the Full
Policy Analysis

Wayne A. Leighton, now an economist at the Federal Communications Commission, previously served as a senior economist for the Banking Committee of the U.S. Senate. The views expressed in this article are those of the author and do not necessarily represent the views of the U.S. government or the FCC.